China announced a hefty increase to its annual defence spending, promising to
spend 601bn yuan (£56.2bn) this year as it seeks to build armed forces to
match its role as a coming superpower.

The rise - a 12.7 per cent increase over 2010 spending - comes amid growing signs that China’s military rise is starting to unsettle other regional Asia-Pacific powers, including the US, Japan, India and Australia.

This week Japan scrambled an F-15 fighter to intercept two Chinese spy planes around a disputed chain of islands in the East China Sea, the latest in a series of niggling stand-offs that threaten to poison China-Japanese relations.

“China's modernisation of its military and increased activity is, along with insufficient transparency, a matter of concern,” warned Japan's chief cabinet secretary, Yukio Edano.

China will spend 601bn yuan ($91.3bn) on its 2.3m-strong People’s Liberation Army, a spokesman for the country’s rubber-stamp parliament, the National People’s Congress said, reiterating that China did not pose a threat to any country..

Analysts remain divided over whether China is initiating an Asian arms race, but India is also spending heavily to upgrade its capabilities and fend off the threat of strategic encirclement by Chinese interests and alliances in Burma, Pakistan and Sri Lanka

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However even allowing for undeclared spending, China’s annual defence budget is still only one-sixth of the $553bn that America plans to spend in 2012, or less than half the US figure when expressed as a percentage of GDP.

China’s leaders repeatedly pledge a “peaceful rise” – where China devotes its energies to building domestic strength and raising living standards at home, rather practicising military adventurism or making enemies abroad.

Beijing’s supporters point to China’s increasing contribution to UN “blue hat” peacekeeping forces, its co-operation with anti-piracy patrols in the Indian Ocean and its deployments in the Mediterranean to rescue migrant workers from Libya as examples of China’s growing responsibility on the world stage.

However the emergence of apparently offensive weapons programmes, including a carrier-killing ballistic missile, a stealth fighter and an aircraft carrier, have caused US defence chiefs to publicly question how these can be consistent with the doctrine of a “peaceful rise”.

Last year, the US defence secretary Robert Gates – whose arrival in Beijing was greeted by the maiden test flight of the Chengdu J-20 stealth fighter – warned that China’s new weaponry “threaten America’s primary way to project power and help allies in the Pacific.”

Washington has voiced its determination not to be squeezed out of its post-War sphere of influence in the Asia-Pacific, moving to strengthen ties with China’s southeast Asia neighbours who are watching China’s rise nervously.

In a clear signal that it would not alter its usual operations, the White House ignored Chinese objections and deployed a super-carrier, the USS George Washington, to the Yellow Sea last autumn as part of a show-of-force against the North Korean regime of Kim Jong-il.

More than China’s actual capabilities – analysts agree that China remains decades away from challenging US military power, even with its new weapons programmes – it is the tenor of the rhetoric emerging from Beijing that is raising questions over China’s good intentions.

Last year China’s defence minister Liang Guanglie said the country was preparing for conflict “in every direction” and would use is rapidly growing economy and technological capabilities to speed up military modernization.

“In the coming five years, our military will push forward preparations for military conflict in every strategic direction,” he said, “We may be living in peaceful times, but we can never forget war, never send the horses south or put the bayonets and guns away.”

Analysts say that Chinese leaders find themselves under pressure to pander to nationalist sentiments among the Chinese public urging their leadership to project China’s image more forcefully, in keeping with its status as a fast-emerging superpower, with diplomatic consequences.

“Certainly China's behaviour is being watched more and more closely,” Geoff Raby, Australia's ambassador in Beijing, told the Foreign Correspondents Club of China this week, “In the last half of last year many regional countries had reason to express caution and hesitation about some of China's actions.”